Unassociated Document


    EXHIBIT
      10.1

     

    ASSIGNMENT

    OF

    FARMOUT
      INTEREST

    


    THIS
      ASSIGNMENT is made and entered into, by and between, West Canyon Energy Corp.,
      also known as PetroSouth Energy Corp. hereinafter collectively referred to
      as
“Assignor”, and Cobra Oil & Gas Company, hereinafter
      referred to as “Assignee”.

    


    WHEREAS,
      this Assignment concerns and effects a change in ownership of a 25% interest
      in
      and to that certain Farmout Agreement dated February 1, 2008 (FOA copy attached)
      by and between Transco Oil & Gas, Inc. (TOG) as Farmor and the Assignor (set
      out above) to this Assignment. Assignor is the owner and holder of a 25%
      interest in and to the FOA to the “North Semitropic Prospect” (Prospect) more
      fully described in the FOA and located in Kern County, California. Assignor
      hereby agrees to transfer Assignor’s 25% interest in the FOA to Assignee along
      with all rights, benefits and obligations therein stated. Assignee hereby agrees
      to accept said 25% interest in the FOA herein assigned along with all rights,
      benefits and obligations therein stated. Assignee acknowledges that the drilling
      and testing of the Prospect is eminent, and failure to meet cash calls as per
      the FOA will result in a loss of interest in the FOA and Prospect. Assignee
      states that it has read and fully understands the FOA and hereby accepts same
      and agrees to abide by all the terms and conditions therein stated.

    


    WHEREAS,
      this Assignment is made in accordance with and expressly subject to the terms
      and provisions of the FOA and shall become immediately affective upon execution
      by both Assignor and Assignee and approval of TOG as Farmor to the FOA stated
      above.

    


    NOW,
      THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and other good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, Assignor does hereby convey, transfer and assign to Assignee
      all
      of Assignor’s right, title and interest in and to the said FOA and Prospect
      described above. 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    This
      Assignment shall inure to and be binding upon the respective successors and
      assigns of the parties hereto.

    


    IN
      WITNESS WHEREOF, this Assignment is executed the day and year as set out
      below.

    


    
      	
              ASSIGNOR:

              Dated:  16
                June 2008

              West Canyon Energy Corp.

              (aka PetroSouth Energy Corp.)

            	
              ASSIGNEE:

              Dated:  16
                June 2008

              Cobra
                Oil & Gas Company

            


    

    
      	 	 	 	 	 
	By:	/s/
              Fred B.
              Zaziski	 	By:	/s/
              Massimiliano
              Pozzoni
	 	
              
Fred
              B. Zaziski - Chairman
              
              20333
                State Hwy. 249

              Suite
                200 - 113

              Houston,
                TX 77070

            	 	 	
              
                

              

              Max Pozzoni - President

              Uptown Center

              2100 West Loop South

              Suite 900

              Houston, TX 77027

            


    

     

     

    APPROVED
      by TOG as Farmor:

    Dated:  17
      June
      2008

    Transco
      Oil & Gas, Inc.

     

    
      	 	 	 	 	 
	By:	/s/
              Larry J.
              Messmer	 	 	 
	 	
              

              Larry
                J. Messmer - President

              11605
                Meridian Market View

              Unit
                124, # 303

              Falcon,
                CO 80831

            	 	 	
            


    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    Farmout
      Agreement

     

    “North
      Semitropic Prospect”

     

    This
      Farmout Agreement (“FOA”), when accepted and agreed to by the undersigned
      parties, shall set forth the terms, conditions and covenants under which Transco
      Oil & Gas, Inc. hereinafter referred to as “Farmor” and those entities
      listed on the signature page, hereinafter referred to collectively as “Farmee”
shall pursue the exploration and development of the North Semitropic Prospect
      Area (prospect). This is a “Drill to Earn” Farmout Agreement and interest will
      be earned in the entire +/-2.390 acre leasehold by Farmee after drilling the
      initial test well as set out below. All operations will be conducted in
      accordance with the mineral lease agreements. In consideration of the mutual
      terms and covenants provided in this FOA, Farmor and Farmee agree as
      follows:

     

    
      	 	
              1.

            	
              Farmor
                is the owner of certain Oil & Gas Leases covering +/-2,390 net acres
                located in Kern County, California and more specifically set out
                in the
                attached Exhibit “A” and the Lease Schedule. This FOA is a binding
                agreement and is entered into by the parties concurrently with the
                industry model form Joint Operating Agreement (JOA), attached as
                Exhibit
                “B” and covering the operations to be conducted on the North Semitropic
                Prospect. Execution of this FOA will serve as constructive execution
                of
                the JOA which is attached as Exhibit “B”. The specific intent of Farmor in
                granting this Farmout Agreement is to cause the drilling of the first
                test
                well to +/- 14.000' to exploit the productive potential of two (2)
                specific target horizons, the fractured Monterey Shale at +/- 10,000
                ft.
                estimated vertical depth and the Freeman Jewett/Vedder Sand at +/-
                14,000
                ft. estimated vertical depth. The operations for drilling and testing
                shall be conducted as per the AFE & Drilling Program attached to the
                JOA as Exhibit “H” and are subject to change by the
                Operator.

            


    

     

    
      	 	
              2.

            	
              Property
                subject to this FOA is described on Exhibit “A” attached hereto and hereby
                made apart of this FOA, as well as the Lease Schedule. Also described
                on
                Exhibit “A” is the Area of Mutual Interest (AMI) between Farmor and
                Farmee. The current Net Leasehold Acreage is +/- 2,390. The net leasehold
                is subject to updates as additional leases are acquired within the
                AMI.
                Subsequent to executing this FOA and payment of the Prospect Acquisition
                Fee, Farmee shall be responsible for its pro-rata share of delay
                rentals
                on the leasehold. The decision to acquire new leases within the AMI
                shall
                be by mutual agreement between Farmor and Farmee. The costs to acquire
                new
                leases within the AMI shall be shared proportionately among Farmee
                according to interest held in the
                Prospect.

            


    

     

    
      	 	
              3.

            	
              Farmor
                and Farmee agree that Farmor and/or its assignees including Farmor’s
                originating geologist will collectively retain the specified 6% of
                8/8ths
                Overriding Royalty Interests (ORR!) and 15% Back-In Working Interests
                (BIWI) as set out in Exhibit “A”. Said ORRI and BIWI shall cover the
                current Leaseholds, future Leaseholds and all Lands within the AMI
                as set
                out in the attached Exhibit “A”. The ORRI shall be free and clear of any
                and all costs for lease acquisitions, drilling, completions, operating,
                re­ works, etc. and shall receive their specific ORRI percentage of
                gross revenues based on 100% of production sales. Farmor’s 15% WI shall
                have the option, on a well by well basis, to participate on a follow
                up
                well or maintain the 15% BIWI which shall be on a per well basis
                and after
                payout of all new lease acquisitions, hard drilling & completion costs
                and well operating costs.

            


    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	 	
              4.

            	
              Transco
                Oil & Gas, Inc. or its appointee shall be the initial Operator and win
                deliver to the drilling partners (Farmee) a 77.00% Net Revenue Interest
                (NRI) on the drill site acreage. Farmee collectively will earn 100%
                Working Interest in the first test well Before Pay Out (BPO), to
                become an
                85% Working Interest After Pay Out (APO) on a per well basis. Farmees
                collectively, shall be responsible for 100% of the Prospect acquisition,
                estimated drilling, testing and completion cost for the first test
                well,
                T.D. +/- 14,000 ft. (Monterey & FJ/Vedder
                test).

            


    

     

    
      	 	
              5.

            	
              Originating
                Geologist Fee: A fee of $10,000 on follow up wells shall be paid
                to Tom
                Fassio which includes updating all geology/geophysical interpretations
                based on new data acquired from previous wells. This fee will also
                cover
                well site geology/geophysics consulting during drilling and completion
                operations.

            


    

     

    
      	 	
              6.

            	
              Estimated
                costs for the first test well.

            


    

     

    
      	
              Prospect
                Acquisition:

            	
              $537,750

            	
              +/-
                $225 / acre for GG&L + OH

            
	
              Drilling
                14,000':

            	
              1,500,000*

            	
              Variable
                Costs, as per current AFE.

            
	
              Completion:

            	
              900,000*

            	
              Completion
                in FJ/Vedder.

            
	 	
              $2,937,750

            	
              *See
                attached AFEs, subject to change.

            
	 	 	 
	 	 	 


    

    
      	 	
              7.

            	
              Should
                the +/- 14,000' test of the FJ/Vedder result in a dry hole, the well
                will
                be plugged back and based on favorable log evaluations, a completion
                made
                in the fractured Monterey Shale at +1- 10,000'. As per current AFE,
                the
                call for completion in the Monterey Shale will be about $1,100,000
                including a +/- 1,000' horizontal
                leg.

            


    

     

    
      	 	
              8.

            	
              Additional
                Test Wells: An election (drilling commitment) by Farmee for a test
                well to
                evaluate the deep Eocene structure (+/-16,500') must be made within
                12
                months and spud no longer than 18 months from date of spudding the
                first
                test well as called for herein. Failure by Farmee to elect and spud
                will
                result in deep rights reverting to Farmor and Farmee retaining all
                rights
                to 100 ft. below deepest vertical drill
                depth.

            


    

     

    
      	 	
              9.

            	
              The
                designated Operator will., as soon as practical after full execution
                of
                Agreements covering 100% of the working interest and payment in full
                of
                the Prospect Acquisition Fee, initiate the permitting process and
                contract
                for a drilling rig for a mutually agreeable move in date. The first
                test
                well shall be drilled to +/14,000'.

            


    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	 	
              10.

            	
              The
                Prospect Acquisition fee listed above is due and payable to Farmor
                upon
                signing of this FDA. Farmee shall retain that percentage of the Prospect
                in relation to the percentage of the Prospect Acquisition Fee paid
                by
                Farmee to Farmor. All subsequent «Cash Calls” by the Operator for the
                above listed Drilling & Completion funds as per the latest AFE shall
                be made following full execution of this FDA. All Cash Calls for
                Drilling
                & Completion funds and/or any cost overruns are due within 10 days
                after Operator issues a Cash Call. Failure to meet a Cash Call for
                funds
                as called for herein shall result in Farmee forfeiting all working
                interest ownership and previously paid in funds to
                Farmor.

            


    

     

    
      	 	
              11.

            	
              Farmee
                acknowledges it has reviewed the attached IDA (Exhibit «B''), all
                leasehold and technical data to Farmee's satisfaction. Farmee agrees
                to
                and acknowledges that upon execution of this FOA and thereafter,
                all or
                any portion of this Prospect is subject to prior sale until such
                time as
                Farmee has paid the Farmee entire pro-rata share (see signature page)
                of
                the Prospect Acquisition Fee due to Farmor. Farmee further acknowledges
                that Farmor has granted an option on at least 25% of the Prospect
                to
                another company until March 31, 2008. In the event of a prior sale
                any
                refund of previously paid funds due Farmee shall be paid to Farmee
                promptly by Farmor.

            


    

     

    
      	 	
              12.

            	
              Confidentiality
                & Representation: Farmee may utilize the displays and exhibits that
                Farmor has delivered to Farmee for the purpose of evaluating the
                Prospect
                and facilitating the drilling of the first test well. However, Farmee
                agrees not to use Farmor’s name in verbal discussions or on any copies
                that Farmee intends to show to any 3rd parties. Farmee agrees that
                all
                data relating to the Prospect is highly proprietary in nature and
                no
                copies of said data will be given to 3rd parties without Farmor's
                written
                approval. Farmee agrees that no interests of any nature in the Prospect
                will be pledged, conveyed or placed of record without Farmor's written
                approval. This FOA, all Prospect data and dealings between Farmee
                and
                Farmor are to be held strictly confidential and not to be disclosed
                to any
                3rd party without written approval from both parties to this FOA.
                Excepting that this FOA may be disclosed to the company that is currently
                holding an option on the Prospect which is referred to in paragraph
                II
                above.

            


    

     

    
      	 	
              13.

            	
              Hold
                Harmless & Indemnification: Farmee, its individual principal officers,
                directors and affiliates (Farmee, etal) hereby agree to fully indemnify,
                defend and hold harmless Farmor from any and all losses, legal actions
                and
                liabilities of any nature that arise as a result of Farmee, etal
                discussions or dealings with any 3rd party with regard to the Prospect.
                Farmee, etal agrees that the Prospect shall be kept free and clear
                of any
                liens, encumbrances and/or legal actions so as to allow Farmor the
                full
                enjoyment of the Prospect. In the event the Prospect is clouded as
                a
                result of Farmee, etal actions, then Farmee, etal agrees to individually
                and corporately stand ready to reimburse Farmor for all losses and/or
                expenses incurred to clear Prospect of any and all
                clouds.

            


    

     

    
      	 	
              14.

            	
              Prospect
                Acquisition Fee: It is agreed that Farmee shall pay to Farmor a deposit
                of
                $34,000 toward the Prospect Fee set out below. The balance due shall
                be
                paid to Farmor immediately once 100% of the Prospect is sold. In
                the event
                the Prospect is not fully sold within 90 days from the date below
                then
                Farmee may request and receive a full refund of the
                deposit.

            


    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

       

    

    This
      FOA
      may be signed in counterparts all constituting a single agreement. Farmee and
      Farmor have signed this FOA which will act as constructive execution of the
      accompanying JOA (Exhibit “B”). This FOA when signed will become the governing
      agreement and will prevail over any conflicts between this FOA and the
      JOA.

     

    
      	 	 	
              Farmor:
                Transco Oil & Gas, Inc.

            
	 	 	 
	 	 	
              By: 
                /s/ Larry J. Messmer 

            
	
               

              Dated:
                1 February 2008

            	 	
              Larry
                J. Messmer - President

              7643
                McLaughlin Rd., # 215

              Falcon,
                CO 80831

              (719)
                520-3208 / (719) 635-6181

            
	 	 	 
	
              Farmee:

            	 	
              WI
                BPO

            	
              WI
                APO

            	
              %
                of Cost

            	
              Prospect
                Fee

            
	
              PetroSouth
                Energy Corp.

            	 	 	 	 	 
	 	 	
              25%

            	
              21.25%

            	
              25%

            	
              $134,437.50

            
	
              By: /s/
                Fred B. Zaziski  

            	 	 
	
              Fred
                B. Zaziski - Chairman

            	 	
              Above
                percentages and dollars to be adjusted as per exercise of prior sales
                or
                options and proportionate to the amount of the total prospect fee
                paid by
                Farmee.

            
	
              Print
                Name & Title

            
	 	 	 
	
              Address:

            	 	 
	 	 	 
	
              20333
                State Highway 249, Ste. 200 - 113

              Houston,
                TX 77070

              (281)
                378-1563 / (281) 271-8600

            	 	 
	
              Phone
                & Fax

            	 	 


    

     

    
      
         

      

      
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